Forever Stamps Not A Good Investment, Will Never Outpace Inflation

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Postage rates will rise on Monday, May 11th. For example, a first-class stamp will become 44 cents, up from 42 cents. For some reason my Costco keeps reminding me of this, promoting the fact that they are selling a pack of 100 Forever stamps at a whopping 25 cent discount to face value. I thought retail stores didn’t profit from selling stamps?

Forever stamps allow you to buy stamps once and know they’ll be good forever – you never have to worry about future rate changes or buy those annoying 1-cent stamps. However, there is no point in stocking up on them, because Forever stamps are not a good investment. For one, postage rates have not outpaced inflation historically. But more importantly, according to the 2006 Postal Accountability and Enhancement Act, the postage rate will never be allowed to outpace inflation.

It seems the best you can do is by right before the next hike (like right now). I suppose I should just buy the Costco 100-pack and not have to worry about stamps for the next five years or so.

Sources: Slate and Postal Accountability and Enhancement Act

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Comments

  1. I thought about doing that recently. However, as things are right now what do I really need stamps for? And how often do I need to goto the post office to mail something? Usually its something big and you can’t use forever stamps for that.

    I bought a packet of forever stamps when they were first released. I still have about half left.

    With Online billpay I can send bills to everyone, even when they don’t have ePayments.

  2. Costco is pushing this only because of the current economic climate–people somehow want to be frugal all of a sudden or at least feel as if they are. At a 25c saving, I wouldn’t buy these–I hardly ever use stamps anyway. However, this reminded me of another incident I just noticed a couple of days ago–you know how in order to verify an account for intra-bank transfers they deposit two small amounts (under $1)? Well, when I verified my account most recently, the bank actually withdrew back their 82 cents after the verification!! I’m sure it’s got something to do with their trying to cut costs but it seemed ridiculous to me :).

  3. Actually, the post rate did outpaced inflation in 2002 and 2003, but that’s before the Postal Accountability and Enhancement Act.

  4. They’re probably just taking a 25 cent loss. 25 cents is a small price to pay if it gets someone into Costco.

  5. Yeah, the main point of the forever stamps is just to avoid the 1 centers. It’s worth buying a few books right before an increase if you want to save a few cents (and avoid trips to buy more stamps for a while), but you’re not going to make any big money over it.

    Of course, most post offices always seem to be mysteriously out of stock of Forever stamps close to a rate increase and then have them immediately after… 🙂

  6. Richard says

    Actually, forever stamps CAN be a good investment, IF you get them at a discounted price. Look at eBay for example. I don’t know how, but some people legitimately sell them for less than face value. I personally have bought 1800 from 1 seller there, and they’ve been good. I paid $699 for $756 worth of stamps.

    It’s even better when you can combine eBay discounts. For example, at the time, eBay/Live were running a 30% cashback promotion. So immediately after the purchase, I actually received about $210 back. So, I actually paid $489 for $756 worth of stamps… roughly 27c/stamp.

    Now, putting aside the question “what am I going to do with 1800 stamps anyway” for a moment, this goes to the topic here that forever stamps aren’t a good investment, when they indeed can be.

  7. I was bummed that a bunch of cool Abe Lincoln stamps came out right before the increase (they were 42 cents)… I wanted to buy a bunch, but didn’t want to deal with the 2 cent stamps later on.

    I bought the 100 pack at Costco instead…

  8. We always buy forever stamps just so we never have to go back to the post office. Ours is way understaffed and you end up waiting in line for about 15 minutes.

  9. Adam I agree! I usually ended up getting stamps at Sam’s Club or an ATM.

  10. i had planned to buy one pack of stamps (14 i think) and call it a day.
    my big savings plan.
    barring my wife using them, that would last me 6 months.

  11. SteveTheHawk says

    One would have to be kind of dense to view a basic postage stamp as an “investment”. The Forever stamp is simply about the hassle factor. Over the years I ended up with a collection of 1, 2, 3 & 4 cent stamps cluttering up a drawer. Probably a total of about a dollar’s worth of stamps. When I needed more first class stamps, I switched to the Forever booklets and threw the penny stamps in the trash. For me, it was worth the dollar to get rid of them.

  12. wait so Costco’s deal is 25c off EACH stamp, or the whole pack? What a joke if it’s just off the whole pack.

  13. I still have more than a roll of 100 “forever stamps” back when it was still 41 cents for a first class letter. I use about 1 stamp per month and I won’t fall for this again!

  14. Money Beagle says

    What always kills me is how people will clean out the ‘incremental’ stamps after an increase, and buy just enough to tide them over. In this case, good luck finding any 2 cent stamps in the vending machine, and prepare to wait in line behind people that will buy exactly 28 cents worth because that’s how many they need to cover the 42-cent stamps that they still have at home. I think in the late 1990’s, I went all out and bought 200 one-penny stamps. I STILL have some and haven’t had to deal with the gold rush stampede since that still seems to pop up with every rate increase. Best $2 I ever spent!

  15. That’s why I try to do as much business as possible online , without having to send out any letters/etc through the mail..

  16. I really like the forever stamps just for the convenience of not having to worry about it. They are actually a good investment if it saves me a trip (or two) to the post office. I wouldn’t buy enough for 5 years or anything, but not having to worry about the postage hikes is quite nice.

  17. Richard – yea as long as you use Live.com for cashback, then i see it working, but 30% days are few and between. At 1.5 rates at the bank, it would take 10 years to match your ROI, but hey, you got 1800 stamps…

    Pogo – its $0.25 off the whole roll, so $43.75 for a roll of 100. yippee!

  18. I dare say the discounted postage sold on e-bay is not “legitimate.” It was probably stolen.

  19. I don’t think its accurate to say that the postal rate increases will never exceed the inflation rate. The law you cited gives the USPS the authority to raise rates on its own each year subject to the inflation rate cap. Congress can raise the rate if it so desires, and it very well may desire to do so given the size of the USPS deficit which continues to grow in excess of the inflation rate. Not to mention the size of the overall federal deficit makes a rate hike even more likely.

    I bought 3 books, I’m pullin’ for a big rate hike so that I can ebay them and retire!

  20. Also. They are somewhat fragile.

    Just throwing that out there =]

  21. Guess what? Stamps from ebay are stolen. Who’d have thunk it?

    http://www.cnn.com/2009/CRIME/05/12/michigan.stamp.theft/index.html

  22. Yes, that story clearly shows that all stamps on eBay are stolen.

  23. Forever stamps are definately convenient…but the post offices always seem to run out. But I do doubt it will outplace inflation.

  24. Went to Costco today, they are still selling the 100 stamps for $41.75 even though it’s now 44 cents each.

  25. I love the forever stamps. Makes mailing the occassional card easy because I don’t need to look up what the current postage cost is. I bought 100 at Costco; should last me a couple of years.

    The time savings is more than worth it.

  26. Watch out for counterfeits and fakes as well. Someone claimed to have a coil roll of 100. The USPS does not print or sell Forever stamps in that format. Genuine Forever stamps come ONLY in books of 20 and sheetlets (for ATM’s) of 18. Anything else is fake.

  27. Gary Gee says

    In the u.k. the British Non value stamps, which you call forever stamps, are a better investment, with all the yearly postal increases, than money in the bank!!!!

  28. Bergerman25 says

    It is really mindblowing that folks are leaving comments about how much time you have to waif at the post office to buy stamps, when we have all just spent the same amount of time (or more) reading and replying to comments made about understaffed post offices 😉

  29. Marketing Executive says

    very interesting comments here. costco sells stamps at a reduced rate because they position products to be loss leaders in order to make up the margins on other products. other examples of loss leaders at costco would be fuel, rotisserie chicken and food at the snack bar. those items alone draw customers who seek value in paying the annual fees and shopping for all other bulk items. forever stamps are not an ‘investment’. an ‘investment’ would suggest a worthwhile return. that’s just not going to happen with this stamp. also to the commenter who suggested that you cannot use forever stamps on bulk items/boxes mailed at the post office. that is not true. i have mailed several boxes using forever stamps designed in a pretty pattern on boxes. try not to read too much into the loss leader items at costco – you have to keep in mind that the average costco shopper’s HH income is over $100k. their target customer profile is like that because they drop hundreds each trip into the store – mostly on things they dont need, like the year supply of toilet paper as well as other big ticket items like pianos and furniture.

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